AMBASSADOR'S BLOG - SHOULD UKRAINE INTEGRATE WITH EUROPE?

30.03.11

I've been in Warsaw this week meeting Polish and British colleagues and having my first good look around the city since I first visited it in 1987. It's always interesting to compare neighbours, and the comparison between Poland and Ukraine tells us a good bit about both. This is particularly relevant as the negotiations on the proposed Deep and Comprehensive Free Trade Agreement (DCFTA) between Ukraine and the EU enter what both sides hope will be the finishing straight.

At the time of the break-up of the Soviet Union, Poland was not notably richer than Ukraine. This terrific comparison site, based on World Bank figures, shows how GDP per capita has developed since then (you can compare Poland and Ukraine, or any other countries, by clicking the boxes on the left). Back in 1991, both countries faced immense challenges. But Poland was able to move swiftly to implement deep-seated economic reforms, and to integrate with the EU: it joined in 2004 (incidentally, whenever people argue that Ukraine will never join the EU, I remember people saying the same about Poland in the early 1990s). In Ukraine, economic reform has been slower, and serious efforts to integrate with the EU began later. There are lots of reasons for this, including the fact that Ukraine in 1991 had to build the institutions of a functioning state, including a currency and a foreign ministry, more or less from scratch.

Now, however, Ukraine is making up for lost time with the DCFTA negotiations. The DCFTA offers Ukraine (population 45 million, GDP per capita $3,002, all figures IMF 2010 nominal data, see here for per capita figures and here for gross figures) a chance to join an EU market of 500 million people with a per capita GDP of $32,283.

To get a feel for the economic boost which European integration can give a country, it's worth noting that on those IMF figures, the size of the Ukrainian economy of 45 million people is $137 billion, ranked 52nd in the world. By comparison, the Polish economy with its 38 million population has an economy of $439 billion, ranked 22nd. That's the league Ukraine should be playing in if it integrates its economy with Europe, including the measures in the DCFTA to harmonise and improve Ukrainian legislation to EU standards. Of course these changes won't come overnight; and much hard work will still be required to persuade EU member states to grant Ukraine the membership perspective which could give economic reform and growth a further boost. But the DCFTA is the first, huge step. This is a fantastic opportunity for Ukraine.

NB Oscar Wilde said "comparisons are odious". So I won't compare the size of the EU's population and per capita income with those of any other countries in Ukraine's neighbourhood, even those which are fantastically rich in natural resources. You can check it out for yourself – and have fun playing with the GDP per capita comparison web-site.